Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
IMF Survey: Latin America Helps Shape Global Economic Recovery
May 24, 2010
- IMF chief visits Brazil and Peru
- Strauss-Kahn to deepen dialogue on region's concerns
- Challenges facing region include capital inflows
Latin America has emerged from the global economic crisis in relatively good shape, and will be an important player to help rebuild the world economy, IMF officials say as Managing Director Dominique Strauss-Kahn embarks on a week-long trip to the region.
Car shopping in São Paulo: Brazil has a key role to play to stimulate growth in the global economy (photo: Paulo Fridman/Corbis)
LATIN AMERICA & THE GLOBAL ECONOMY
Strauss-Kahn, who arrives in Brazil on May 25 and will also visit Peru, will reinforce the changing image of the IMF in Latin America, talk with political and business leaders as well as students, and promote the role of the IMF in harnessing global cooperation.
“We managed to overcome the first part of the crisis thanks to the unprecedented level of economic cooperation among the big countries, not only in the G-20 group of advanced and emerging economies, but in the G-20 plus,“ Strauss-Kahn told reporters before leaving.
Region bounces back from crisis
Latin America weathered the recent global economic crisis much better than in the past, thanks to stronger policies already in place and healthier economies that were more prepared for the downturn. Compared to other emerging economies, Latin America did better than many.
The IMF was able to support the region during the global economic crisis by quickly providing a new Flexible Credit Line (FCL) to emerging economies with solid policy track records. Mexico and Colombia each requested and received access to rapid funding, which neither country has needed to draw on.
Not only has the region emerged more quickly from the downturn than have advanced economies, but social costs in the region were more muted. In the larger Latin American economies, unemployment rose about 2 percentage points. In the United States, by contrast, unemployment rose 5.5 percentage points.
“This time around many things were saved – jobs, families, opportunities for children to get an education, as well as public spending and the ability to continue investing in infrastructure, health, and education,” said Nicolas Eyzaguirre, head of the IMF’s Western Hemisphere Department, in an interview with IMF Survey online.
While most advanced economies are projected to grow slowly in coming years, the prospects for Latin America are rosier. The regional economy contracted by 1.8 percent in 2009, but is expected to grow by about 4 percent in 2010, perhaps even a little more, which would keep pace with growth projections for the global economy.
Brazil has a key role to play in the global economy, including as a member of the G-20 advanced and emerging economies. As the IMF moves forward with reforms to its own governance structure, Brazil’s influence will be part of the successful process of change within the institution.
In recent years, Peru and Brazil have made significant social progress, thanks to strong output and employment growth, and by investing in social safety nets to combat poverty and inequality. During the economic crisis, timely policy actions limited the fallout from the global crisis, while social safety nets provided an important lifeline.
Student townhall dialog
During his visit, Strauss-Kahn will take part in a high-level televised debate in São Paulo, Brazil on “the Global Economy in a Post-Crisis World,” produced by GloboNews. Panelists will include Armínio Fraga Neto, the head of Brazil-based hedge fund Gávea Investment, which manages $5.8 billion in investments, and Maurício Botelho, president of business consulting firm Mogno and chairman of the board of the aviation company Embraer.
In Brasilia, Strauss-Kahn will meet with Brazil’s President Luiz Inácio Lula da Silva, and with Finance Minister Guido Mantega.
Strauss-Kahn will then visit Lima, Peru where he will meet with President Alan Garcia and with Finance Minister Mercedes Araoz, as well as Central Bank Governor Julio Velarde.
A townhall-style discussion between Strauss-Kahn and university students at the Universidad San Marcos in Lima will cap the outreach campaign, Ask the IMF, with students from Peru and five other Latin American countries discussing issues of importance for the region, including global financial reforms, the effects on Latin America of the Greek crisis, and how to create sustainable economic growth.
Strauss-Kahn will also appear in a televised round table discussion with several regional finance ministers to discuss global challenges ahead of his address to the meeting of finance ministers of the Americas and Caribbean on May 28.